SME Loan Plan Funding To Be Sought

The Government will soon seek the Legislative Council Finance Committee’s funding approval for a concessionary low-interest loan for local businesses.

Secretary for Commerce & Economic Development Edward Yau made the statement today in response to a lawmaker’s question.

With the COVID-19 infections, there is an urgent need to further alleviate the pressure on small and medium-sized enterprises (SME) to reduce business closures and layoffs, Mr Yau said.

He pointed out that the 2020-21 Budget introduced a concessionary low-interest loan under the SME Financing Guarantee Scheme applicable to SMEs of all sectors, for which the Government will provide a 100% guarantee.

The maximum loan amount is the total amount of wages and rents for six months of the enterprise, or $2 million at most, with a maximum repayment period of three years and an option of principal moratorium in the first six months, he said.

Mr Yau added that the interest rate will be set at a relatively low level - the prime rate minus 2.5% - and the guarantee fee will be waived.

The Government will also provide a maximum loan guarantee of $20 billion for approved loans.

Mr Yau said: “We will soon seek the Finance Committee's approval for funding, with a view to rolling out the new product around one month after funding approval.”

When asked if the Government will consider making Mandatory Provident Fund contributions for the owners and staff of retail shops for six months to one year, Mr Yau said this would involve operational issues as well as a relatively long period of preparation.

The Government considers that the proposal is not the most direct and timely solution to address the current situation, he said.

Mr Yau further explained that $5.6 billion and $3.81 billion have been reserved under the Anti-epidemic Fund to implement the Retail Sector Subsidy Scheme as well as the Licensed Hawkers Subsidy Scheme and the Food Licence Holders Subsidy Scheme.

These measures will help retailers and catering operators suffering from a sharp decline in sales and benefit about 100,000 enterprises, he added.